An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
Pastor Scams Divorced Mother In Real Estate Fraud
March 24, 2014
By September 2009, Houston, Texas-area pastor Samuel Ray Palasota had found a trusting soul: a mother who had received about a $1 million divorce settlement in 2007. On top of her being flush with cash, she also sought spiritual guidance and emotional support from pastor Palasota. Seeing the bucks and the vulnerability, this man of God preached the benefits of a real estate investment program under the name of "The Maker's Resources." According to the pastor's spiel, the plan was to buy Houston-area foreclosed homes below the market and make profits on the resales. Ah yes, the old buy-low-sell-high, except this one supposedly came with the Lord's blessing.
The Guarantee
The cost of such investment salvation? Well, all it was gonna cost this divorced mother was a modest $650,000. And the risk? Not to worry, this investment had a "guaranteed" 5% return for every $100,000 invested, up to a 40% annual return on a $650,000 maximum investment.
To Hell But Not Back
At first, it sort of looked like this real estate program was the real deal. Palasota mailed and wired funds that he described as returns on the mother's investment. Moreover, Palasota sent religious-themed letters to her that lulled her into a sense of calm about the risk of her funds. Just this one little, teeny-weeny problem. Not a penny of the $650,000 investment made it into the real estate investment. Instead, a la Ponzi, Palasota was merely returning a small amount of the mother's principal in the guise of returns. Sadly, this subterfuge seemed to have accomplished what it was intended to to.
Towards the end of 2010, Palasota had spent it all. On cars, computers, furniture, and the like. Not a penny was left and Palasota's own bank account balance was zilch to boot.
Eye Of A Needle
On May 23, 2013, a federal Indictment was unsealed against Palasota, charging him with 21 counts of mail fraud and 3 counts of wire fraud. USA v. Palasota (NDTX, 13-CR-213, May 8, 2013).
On October 17, 2013, after three days of trial, Palasota, 53, was convicted on all counts. The judge found that the intended loss was in excess of $1 million, taking into account not only the $650,000 investment but also the efforts of Palasota to convince his victim to sell her home and transfer those proceeds to him.
On March 14, 2014, Palasota was sentenced to 71 months in prison, three years of supervised release, and ordered to forfeit a Dodge Ram Truck and Hyundai Genesis sedan purchased with the proceeds of this fraud.
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